Netcare adopts more nuanced Covid approach


Netcare adopts more nuanced Covid approach

Published Date: 2020-09-30 | Source: Stephen Gunnion | Author: Stephen Gunnion

Netcare adopts more nuanced Covid approach

The average length of stay for Covid-19 patients requiring a critical care bed has fallen to about six days after peaking at 17.

Netcare says it's seen an incremental improvement in its performance since May as measures curtailing access to non-urgent hospital procedures were eased. However, the private hospital group says revenue is still down sharply from last year as it kept beds open for Covid-19 patients.

In an update, Netcare said since its first case on 9 March it had admitted 11,913 Covid-19 positive patients, with just over a third of them treated in High Care or Intensive Care units. However, many of the hospital admissions, length of stay and mortality rates were lower than initially anticipated. Although the easing of lockdown regulations could result in a second wave of infections, it said its approach would be far more nuanced and contained in terms of the facilities potentially made available for treatment. It also didn't foresee wide-scale suspension of elective surgery and activity over the short-term.

In April, when it experienced the most severe impact of the lockdown which impacted non-urgent surgery and medical and trauma cases, acute hospital occupancies fell to 32.5%. It was affected to varying degrees between May and August, with elective surgery again suspended on a case-by-case basis at the height of the pandemic in July as critical bed capacity was constrained. It said it had seen a gradual improvement in overall occupancy levels this month, with an average full-week occupancy of 49.7%.

The average length of stay for Covid-19 patients requiring a critical care bed had fallen to about six days after peaking at 17 days.

For the 11 months to end-August, Netcare said revenue came in 12.9% below the same period last year due to lower activity levels because of the pandemic. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 51% and operating profit reduced by 61.5%, before applying the new IFRS 16 accounting methodology. It also incurred additional costs of R219 million, related to the pandemic.

At the end of August, Netcare had cash resources and available committed, undrawn facilities of R5.1 billion. To preserve cash its postponed approximately R800 million of capital expenditure earmarked for new and current projects. However, capex on key strategic projects continued during the period, with total spending for the year expected to amount to about R1 billion, including additional Covid-19-related capex of approximately R155 million.

Netcare plans to release its full-year results on 23 November. It suspended its interim performance due to the impact of Covid-19 on its business in April.

Its shares declined by 0.7% to R12.60 yesterday.

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